This Writ Petition has been filed seeking for issuance of a Writ of Certiorarified Mandamus calling for the records of the impugned communication, dated 17.8.2010 issued by the respondent and quash the same and consequently to direct the respondent bank to refund the sum of Rs.17,16,331/- with interest to the Petitioner.
2.The Petitioner questions the draconian banking practice followed by a nationalized bank of repute. The Petitioner is a hospital. Originally, the Petitioner has availed a term loan of Rs.7.5 crores from the respondent/bank. The said loan was availed and was being repaid. The Petitioner applied for further loan of Rs.8.75 crores for improving the facilities. The said loan application was made on 12.6.2009. The respondent/bank sanctioned a sum of Rs.6,80 crores on 15.12.2010. According to the Petitioner, since the sanctioned amount was insufficient, the Petitioner did not avail the second loan and thereafter pre-closed the loan. The balance in the first loan of Rs.7.5 crores was Rs.342 lakhs on the date of pre-closure. For the said pre-closure, the respondent/ bank had charged a sum of Rs.6,96,331/- as pre-closure charges. Apart from the above, the respondent/bank has charged a sum of Rs.10,20,000/- which is christened as upfront fee by the respondent/bank. Since the respondent/bank adopted an arm-twisting tactics and refused to return the original documents of the Petitioner, the Petitioner has paid the said sum of Rs.10,20,000/- demanded by the respondent/bank as up-front fee for the un-disbursed loan under protest and has now approached this Court through this Writ Petition.
3.I have heard Mr.S.Anwar Sameem, learned counsel for the Petitioner and Mr.S.Sethuraman, learned counsel for the respondent/bank and perused the materials placed before this Court.
4.As regards the pre-closure charges levied on the first loan on which a sum of Rs.342 lakhs was the balance payable on the date of pre-closure., I do not think the Petitioner can dispute the same, as much as it forms part of the contract with reference to the sum of Rs.10,20,000/- demanded and collected by the respondent/bank on an un-disbursed loan. I do not think there is any justification in the action of the respondent/bank. However Mr.S.Sethuraman, learned counsel for the respondent/bank would rely upon a circular issued by the Chief General Manager of the respondent/bank regarding pre-payment charges and the circular issued by the respondent/bank in Circular No.CPP/JLJ/CIR/26, dated 22.6.2007. Though loan processing charges and up-font fee leviable on term loans is disclosed in the said circular, no- where it is stated that such processing charges and up-front fee could be collected even for a loan which was not disbursed.
5 In the letter, dated 14.09.2010 addressed to the Banking Ombudsman by the chief Manager of the respondent/bank, it is claimed that fee for processing for term loan proposal is payable up-front. I do not think that there is any legal basis for insisting such payment. Any fee or charges can be demanded only on the basis of agreement between the parties. It is the common knowledge that there cannot be any agreement before actually disbursement of the loan amount. In the absence of any contract between the parties, I do not think the respondent/bank would be justified in demanding up-front fee. Even from the letter, dated 14.09.2010, I do not find any justification for the fancy claim of Rs.10,20,000/- as up-front fee. The letter dated 14.09.2010 claims that the company was advised to pay a sum of Rs.10,20,000/- as up-front fee for the following reasons:
(1)pre-closure /commitment charges are recoverable for all commercial term loans, as per GENERAL BANKING PRACTICE.
(2)fee for processing any term loan proposal is up-front. As stated by the complainant company vide para 2 of page 1 and item No.1 and 2 in pages 1 and 2 of their letter, Rs.6,80 crores has been sanctioned to them and hence they are liable to pay the same.
6.As far as the pre-closure charges are concerned, if the customer has availed loan and loan is closed pre-maturely, naturally the bank would be entitled to the charges as per the contract entered between the parties. But insofar as the upfront fee is concerned, the same can be levied only when there is a commitment or undertaking by the other party to pay the same.
7.As already pointed out, the loan though sanctioned, was not disbursed. It is not in dispute that the Petitioner had not availed even a single pie of the loan of 6.80 crores. Therefore the claim of the respondent/bank that it is entitled to charge 1.5% of the sanctioned loan, namely Rs.10,20,000/- towards up-front fee on a loan which was never disbursed cannot be accepted.
8.For the foregoing reasons, the impugned communication, dated 17.8.2010 is quashed with reference to the demand of Rs.10,20,000/- for the un-disbursed term loan and it is stated at the bar that the Petitioner has paid a same on 24.8.2010 itself. The respondent/bank is directed to refund the said sum of Rs.10,20,000/- with interest at 12.5% p.a.
9.With the above direction, the Writ petition is partly allowed. Consequently, connected Miscellaneous Petition is closed. There shall be no order as to costs.
To The Chief Manager, State Bank of India, 169-E,Kamarajar Salai, Madurai-9..